Wherever one turned at the Berlin film festival, or back home in California, movie people have been taking the line: "Does anyone really care any more about the Oscars?" Founded in the late 1920s, as something between an excuse for trade unions and a public relations exercise for Hollywood, the Academy of Motion Picture Arts and Sciences had decades of unquestioned authority in which the public, the film community and the critics could agree on not just the films nominated for its annual awards, but the likely winners. There weren't too many surprises until the 1990s. And then it all went to hell as Hollywood lost the ability to make good, mainstream pictures with prestige appeal, and the voting body of the Academy (not much more than 6,000 insiders) became increasingly impressed by outsider or independent pictures.

But the Academy depends for its annual budget on the television deal it has with ABC. In turn, that deal is calibrated to the actual viewing figures – because on those numbers hangs the price the network can charge for television commercials. That crisis has been growing because in recent years the Academy has nominated movies seen by relatively few people. The Best Picture nominees for 2007 were Babel, The Departed, Letters from Iwo Jima, Little Miss Sunshine and The Queen. Three of those five were small, indie and exciting. Two were not – though not even the Scorsese or the Eastwood pictures did that well.

The Departed scraped home – you could hear the nervous strain in Marty Scorsese's cracked voice. But in addition, that year, the acting awards went to Forest Whitaker in The Last King of Scotland; Helen Mirren in The Queen; Alan Arkin in Little Miss Sunshine; and Jennifer Hudson in Dreamgirls. Only the latter counted as a big box-office picture.

The next year was far worse. The nominations for Best Picture were Atonement, Juno, Michael Clayton, No Country for Old Men and There Will be Blood. A lot of critics felt it was a good year, but the public had seen few of these films – and they ducked the TV show.

Last year, the nominees were The Curious Case of Benjamin Button, Frost/Nixon, Milk, The Reader and Slumdog Millionaire. That the last of those should win (unthinkable just a few years ago), had to do with its energy as an entertainment, its novelty, and the small-audience gloom that attended the other contestants. Many people noted the absence of The Dark Knight in these nominees, though it had been a big hit with the public.

Something had to be done. The Academy's TV contract is up for renewal in 2014 and it desperately needs a new lease of life. Of course, what it really needs is a renewal of the old contract between Hollywood and its audience that it knows how to deliver big pictures. There was a change of leadership at the Academy (Sid Ganis finished his term as president and was replaced by Tom Sherak). And someone came up with the brainwave of having 10 nominees for Best Picture. That harked back to 1943 (close to Hollywood's peak as a business) and it was meant to draw more popular films into the contest. It also means twice the usual time being devoted to Oscar-night introductions of the nominated pictures.

The scheme seemed crazy and speculative from the start, and it amounted to a message from the Academy to its members: shape up, guys – go popular or we're in trouble. In advance, some observers foresaw the chance of more room for films like No Country for Old Men and There Will be Blood. And so it proved.

So now the big board goes as follows: Avatar; The Blind Side; District 9; An Education; The Hurt Locker; Inglourious Basterds; Precious; A Serious Man; Up; and Up in the Air. Of that selection, I would say this: the reckless Basterds at least gets Quentin Tarantino on the show and he might be interesting; District 9 deserves a nod, but it is out of its rent area; Up is what may become the animation slot; while Precious, Up in the Air and An Education (especially) are being horribly overrated. The Hurt Locker is a worthy contender and A Serious Man is the best film of the year (just take a look). That leaves Avatar (grossing over $600m) and The Blind Side ($240m).

At first, it looked as if Avatar had saved the Academy's bacon. It was not just big box office, it was the biggest (and I was one of several writers who predicted it would get nowhere near that level). So, there was in prospect another James Cameron year (like that of Titanic) and the celebration of a picture that said: look, the movies have always been a silly light show.

Then, even as the numbers on Avatar rose, you could hear the air going out of its balloon. Even its fans were apologising for its "story". It's hard to think of a big picture that has so quickly lost its engine. Of course, no one can rule out the possibility that 6,000 voters are muttering to themselves about the Academy, "You may think we're idiots, but don't take us for granted. We're quite grown up enough to see that The Hurt Locker is more important – and we rather enjoy giving the big prize to one of Cameron's discarded wives." (He still has more marriages than Oscars.)

So will The Hurt Locker follow its victories at the Baftas by getting Best Picture, no matter that its box-office figure is only a 50th of that of Avatar? I think it will, but I can easily see the Academy members covering their bets by going popular with the acting awards. So, despite the Baftas, Sandra Bullock will get the actress prize – because she had two big films this year, because she's old-style Hollywood; and because she is a favourite. In the same way, I don't think Colin Firth or anyone stands a chance against Jeff Bridges. As a long-time Bridges devotee, I'm here to tell you that he has made at least 10 films in the past that are more deserving than the creaky Crazy Heart. But Bridges is like Bullock: he's a loyal professional; he's popular; and he's actually a very good actor in the old Robert Mitchum manner that warned: don't let them catch you acting.

Bullock and Bridges will be grandstand moments in the show, while Firth would only demonstrate his shyness, and Carey Mulligan has a name America can't get right yet. She may become a fixture in the future, just as Firth is already. Meanwhile anyone with any sense of what acting is knows that Meryl Streep should win again, even if her manner at the Golden Globes seemed to say, "Oh, please don't notice me this year".

Audiences may watch the television show because of the "race" between Avatar and The Hurt Locker. If there was a weigh-in, you'd expect to see Cameron and Bigelow getting it on for real as a ticket-selling ploy. And the show? Well, the worst sign of what's to come was that the Academy had three honorary awards – Lauren Bacall, Gordon Willis and Roger Corman – and chose to get them done with months before Oscar night. I think this showed a lack of panache that makes me sick. Corman is a godfather to a generation of big names and surely they would have come out to tease his cheapskate ways. Gordon Willis is the look of The Godfather and the Alan J Pakula films – for none of which he was even nominated. And Lauren Bacall is one of the last stars left with unaffected self-importance. If Sunday's show can manage without those three, I shudder to imagine the musical numbers and set-piece comedy routines it has in store.

You see, once upon a time, the Oscars show was the big game night in America. As it is now, the movies, their prizes and their dresses have all turned camp. But the Golden Globes were onto that theme years ago and they come out in January. By March the Oscars look more and more suspect. Is it time to redesign the statuette so the figure is recumbent?